8/17/2007 @ 12:40PM

So Long, Warren

Mutual funds that have been longtime Berkshire Hathaway investors are decamping.

Warren Buffett draws as many gee-whiz headlines as ever these days. But the
Berkshire Hathaway
mystique may be wearing thin among longtime devotees who know the company best–several solid mutual funds that have held its stock for ages.

One is the sterling Sequoia Fund, bound in a tight relationship with Buffett for four decades. Since the start of 2005 Sequoia has unloaded $650 million of Berkshire shares, shrinking their weight in Sequoia’s portfolio from 35% to 26%.

Wallace Weitz shares a hometown with Buffett and runs Weitz Value and Weitz Partners Value funds. He has had a long-standing appetite for the Wizard of Omaha’s stock, which had been making up 7.6% of his two funds. Weitz lightened up on the stock last fall. The reduction in the holding, to 7.4% of assets for Value and 7.2% for Partners Value, is small, yet it’s equivalent to a devout Muslim deciding to skip some of the required daily prayers. Weitz says he still loves Berkshire but trimmed it to buy other holdings.

Another Buffett acolyte, Christopher Davis and his Davis Advisors, has exited from Berkshire entirely in Davis Financial Fund. It recently reported selling $49 million worth of Berkshire A shares for a $20 million profit. Three other Davis-run funds have thus far maintained their levels of Berkshire stock.

Sequoia did not get around to alerting its investors until earlier this year that it has been easing out of Berkshire lately. The stated reasons for reducing its Berkshire load were its desire for better diversification and Buffett’s age.

Buffett, 77 on Aug. 30, has assured shareholders that a change in management (he has not publicly named a successor yet) and a possible shift in control to the Bill & Melinda Gates Foundation (he’s donating most of his shares to it) will have no impact on Berkshire’s fortunes.

The extraordinary rise in Berkshire’s share price during Buffett’s tenure (2,533-fold so far) is not necessarily over, yet it seems to be tapering off. Over the past five years the share price growth has lagged behind the S&P 500′s.